Wolfe and Boerschinger: Class Actions for ER Costs

Wolfe and Boerschinger, Case Number 18-6091, decided September 9, 2019 granted class action to a class of veterans who had treatment at the ER and were requesting the VA to refund the costs.

In Staab v. McDonald, 28 Vet. App. 50 (2016), the Court found the VA had wrongly denied claims for reimbursement of non-VA emergency care whenever a veteran had any insurance covering the service.  Staab held the VA had erroneously interpreted 38 U.S.C. Section 1725.  However, after Staab, the VA adopted a new regulation purporting to implement Staab, but actually

VA excluded from reimbursement nearly every type of expense a veteran could have incurred if he or she had insurance covering the non-emergency VA medical service at issue. So, after Staab, VA adopted a regulation that functionally creates a world indistinguishable from the world Staab authoritatively held impermissible under the statute. As the petitioners put it, "post-Staab, insured veterans are in exactly the same monetary position with respect to insured claims as they were pre-Staab."

Id. at *2.

The Court continued in its concern for VA action and stated:

It's difficult to conceive how an agency could believe that adopting a regulation that mimics the result a Federal court held to be unlawful is somehow appropriate when the statute at issue has not changed.  But there is more. Even after we decided Staab, and after VA dropped its appeal of Staab, VA was affirmatively informing veterans that they were not entitled to reimbursement for non-VA emergency medical care if they had any insurance covering the service at issue. In other words, the Agency was telling veterans that the law was exactly opposite to what a Federal court had held the law to be. Who knows how many veterans relied on such a misrepresentation—for that is what it was—in deciding not to appeal VA decisions that denied reimbursement for non-VA emergency

medical care 

All of this is unacceptable.

Id. at *2.

The Court engaged in a careful analysis of the Staab statutory, then certified the class (all claimants whose reimbursement of emergency medical expenses incurred at non-VA facilities VA has or will deny, in whole or in part, on the grounds that they expenses are part of the deductible or coinsurance payments for which the veteran is responsible.).  Id. at *28. 

The Court then looked at the merits of the petition and determined it had the right to issue extraordinary writs in aid of its jurisdiction according to the All Writs Act.  The Court noted the statute (38 U.S.C. Section 1725(c)) says "The Secretary may not reimburse a veteran under this section for any copayment or similar payment that the veteran owes the third party or for which the veteran is responsible under a health-plan contract."  It further explains the regulation (38 C.F.R. Section 17.1005(a)(5) states: "VA will not reimburse a veteran under this section for any copayment, deductible, coinsurance, or similar payment that the veteran owes the third party or is obligated to pay under a health-plan contract."  Id. at *29.  The Court then determines

The question is whether VA's inclusion of "deductibles" and "coinsurance" (but not "balance billing"197) in the list of non-reimbursable items is a permissible construction of section 1725. No matter what standard of review we use, it's not. We hold § 17.1005(a)(5) is not based on a permissible construction of section 1725(c)(4)(D) for two related, but distinct, reasons: (1) It's inconsistent with Staab's interpretation of section 1725, and (2) deductibles and coinsurance aren't "similar" to a copayment (and VA didn't explain—to defeat arbitrariness—how they're "similar" to a copayment).

Id. at *29.  After discussing the merits, the Court determined the veteran has shown she lacks adequate alternative legal channels to obtain relief.  The Secretary wanted the veteran to argue the issue to the Board of Veterans’ Appeals, but the Court determined that “would be futile because the Board doesn't have jurisdiction to invalidate the regulation. Thus, petitioner lacks an adequate alternative legal channel because

the Board can't provide the relief she seeks.”  Id. at *34.  The Court also determined it would exercise discretion under the All Writs Act in this case. 

The Court then ordered that the regulation (17.1005(a)(5)) is invalid, deemed VA decisions that denied reimbursement for medical expenses deemed deductibles or coninsurance to be invalid, and ordered the VA to readjudicate those claims.  It also ordered the VA to stop sending letters that contained incorrect statements about the law.  It also gave the VA 45 days to prepare and submit to the Court for approval a plan to provide notice to veterans who had been sent the incorrect notice.

Judge Falvey dissented principally saying the All Writs Act requires writs to be in aid of the Court’s jurisdiction and further determining that because the Court’s appellate jurisdiction is defined in 38 U.S.C. Section 7252 and 7261 as reviewing decisions of the Board, the Court cannot use the AWA without a foundational Board decision to review.  He also believes the VA made good arguments for the language in the amended regulation issued as a result of Staab and that since the issue has not been decided by the Court, the right to a writ is not clearly and indisputably correct.  Finally, Judge Falvey wrote that a Board decision is not a futile action and could find helpful facts.

This case, in combination with Godfrey, provides a template for further class actions.  It is also an amazingly well researched and put together statement.  I have no doubt the VA will ask for a stay of the order, seek an en banc decision or appeal the decision, but believe Judge Greenberg’s reasoned opinion will be affirmed.  The result will be the VA cannot undue Staab through a regulation and veteran’s will receive more money in their pocket from ER expenses that have been denied.  This decision also shows that at least two judges of the Court are deeply offended by the VA’s attempts to avoid Court decisions by re-writing regulations.

The decision was masterfully written by Judge Greenberg and joined in by Judge Allen.  Judge Falvey wrote the dissent.

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